Friday Aside: How The Competition Between Apple, Google, Amazon, And Facebook Is Good For Everyone

By Michael Reiter, Attorney at Law

Three of the companies listed above are California businesses (regardless of their actual incorporation).

I enjoy Apple’s mobile products to a degree, though I use a PC for work.  I switched from Yahoo, which I began using in 1995 to Google in 1999 after a friends’ fiancee told me about it during dinner at the Venetian.  I cannot remember my first use of Amazon, but probably in the late 1990s.  I only sparingly use Facebook, but I probably would have been on it non-stop if it had been formed fifteen years earlier.

Though I am still not convinced Facebook belongs in the category of the four companies, these four West Coast companies have the ability to dominate American life for decades.  That is ultimately good for the consumer, and I hope no one company will ever emerge victorious.

These companies are not directly competing with each other in every market segment.  Federal antitrust law will keep them from being vertically and horizontally integrated behemoths.  However, when they compete with each other, it is ultimately good for consumers, and their competition has influenced other industries as well.

Google’s key concept is organizing information.  Information is Google’s product.  Of course, their actual product is advertising, but you can go a great ways without having to give Google money.  That alone is a victory for consumers.  Google amuses and delights me in new ways.  Of course, I’ve never tried to get a hold of human being at Google (though one once contacted me to see if I was a satisfied customer).  I can imagine that could be difficult if you have a problem.

Apple’s key concept is “it just works.”   I have had some technical problems with Apple products over the years, but they have been problems with networking (which has been the bane of my existence since the early 1990s), restrictions on music created by the rights holders, and the fact that iTunes for Windows has become bloatware.   Otherwise, I haven’t had any major problems with Apple products.

Amazon’s key concept is excellent customer service, and low prices.  Yes, electronic retailing is an unfair advantage against brick and mortar, but the automobile was unfair to the carriage industry.  Why is Amazon’s customer service excellent?  Because I have never had to use it.  Even when I had a return, I read the website, and I returned it.

Facebook.  Other people like Facebook, and I’ll leave it at that.  I think they have major challenges in the year’s ahead.  The internet is laden with casualties: Myspace, Napster, and other that could not compete.  I am hoping Facebook survives, not as a hegemon, but as a legitimate contender to keep the others in check.

I enjoy music, though perhaps not to the degree I did when I could walk between Amoeba Records and Rasputin Records on a daily basis on Telegraph Avenue.   Here, I see a three-way competition between Apple, Google and Amazon.  I have shied away from physical media in the past few years, because of the ease of legal digital downloads.  Even though Apple has made a mostly-closed ecosystem with iTunes/iDevice integration, Amazon has gotten my attention with its low prices.  Five dollar albums and .69 single tracks blows iTunes’ now-standard (though with some exception) $1.29 single track prices.   I no longer have the equipment or time to care about the quality difference between the formats.  This is good for music (because it encourages legitimate music buying), and good for the consumer.  Google has the ability, especially if it can leverage Youtube, to become a player in music.

The competition for social networking seems to be Facebook dominating, with others taking shots.  Apple can’t seem to get a coherent social networking strategy together, and Google has the best shot because of their bags of cash.  To me, it reminds me of how Microsoft bought its way into consoles with the Xbox.   Facebook is already in the search business, and they will use their market power in social networking to compete in the core markets of the other three giants.

The competition for information is between Apple, Amazon, and Google.   Apple has iBooks, Amazon has Kindle (and soon, a tablet running Google’s Android), and Google has Android.  I hope no one wins this one.  On one hand, you have Google scanning whole libraries, and making public domain materials available for free.  Their gambit for, effectively, compulsory licensing of all works would have done wonders for the spread of information.  Amazon’s model is paid content, but often, paid content is king.   Apple has superior, human-based design and functionality.   I just hope we get to the point where we can have the best of all worlds.  Right now, you can have your Kindle content on your iPad and iPhone, and your Google content on your iPad and iPhone.  It would be nice to be able to have an Amazon device that played your Apple Store content, but for legal reasons, that probably isn’t going to happen without more pressure from the Department of Justice.
Video competition is nowhere near where it should be for a variety of reasons, and I hope that the market power of Apple, Amazon and Google can slowly change that.  In a future perfect for consumers, you can have unbundled multichannel video for one price, no matter where or how you view it.  You’ll be able to buy or rent, all-you-can eat, or a la carte, and buy a movie once and own it once and for all.  Of course, that’s not the model of the content companies.

There is sometimes some consumer benefit to monopoly power.  With pre-breakup AT&T, you didn’t have to fret about what kind of phone to get.  Ultimately, I think the lack of simplicity is outweighed by the telecommunication, media, and information technology options we have today.